Currencies: Dollar rebounds from 3-month low as Powell repeats Fed could be ‘patient’

The U.S. dollar found some respite from selling on Thursday, a day after dropping to a three-month low, amid an economic calendar crowded with Federal Reserve speakers, including Chairman Jerome Powell, who reiterated the idea that the central bank could be patient in its monetary approach.

The ICE U.S. Dollar Index

DXY, +0.43%

rose 0.3% to 95.541 after diving to its weakest since October in the wake of the Fed’s December meeting minutes which showed that some central bank officials had been in favor of pausing interest rate increases last month., though the committee ultimately voted unanimously in favor of a 25 basis point rise.

“Yesterday’s drop in the dollar may portend further weakness…as the Fed sinks into its ‘pause,’” wrote Macquarie strategists led by Thierry Wizman. “As such, the dollar may now have a few more weeks of selling pressure in front of it.”

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Powell, in an interview at the Economic Club of Washington, said inflation was “low and under control” and that the central bank could afford to be “patient” and “flexible” with its monetary policy going forward. However, he also indicated that the Fed won’t move to slow the unwinding of its balance sheet.

See: Powell says Fed is ‘watching and waiting’ on interest rates

He further said that a prolonged shutdown of the U.S. government would likely show up in U.S. economic data, but that the principal worry was slowing global economic growth.

Also check out: BOE’s Carney sees the U.S. dollar eventually losing its reserve-currency status

In Thursday’s data, first-time jobless claims for the week ended Jan. 5 slipped to a one-month low of 216,000. The greenback held steadily in positive territory following the release.

Read: Fed chatter confirms interest rates on hold until May at earliest

The euro

EURUSD, +0.0174%

retraced some of Wednesday’s gains which carried it to its highest level since mid-October. But after its impressive rally, dollar skeptics could view Thursday’s modest pullback in the shared currency as a reason to buy, market participants said.

The euro last fetched $1.1498, down from $1.1545 late Wednesday.

In the U.K., a Labor Party official played up the chanced of a delay to the March 29 date when the U.K. is slated to leave the European Union. A delay was previously dismissed by Tory officials. Meanwhile, Labor leader Jeremy Corbyn is seeking fresh election over Brexit.

The British pound

GBPUSD, -0.0078%

was one of the weakest major currencies on Thursday, buying $1.2748, down versus $1.2788.

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Also read: A Brexit delay is becoming more likely and here’s how the pound may trade

Elsewhere, China’s yuan was guided to its strongest level versus the dollar since August in the wake of the conclusion of Beijing-Washington trade talks, which resulted in China vowing to buy more U.S. goods. The conversation ended on an optimistic note Wednesday but left the most divisive issues in the long-running trade battle yet to be resolved.

In Beijing, one dollar bought 6.7885 yuan

USDCNY, +0.0000%

down 0.4% near its lowest since late July, according to FactSet. In the offshore market, the buck fetched 6.7927 yuan

USDCNH, -0.0015%

down 0.3%.

In less rosy news, Chinese consumer and producer prices decelerated sharply in December, triggering new worries about China’s economic health.